Sterling gained sharply towards the end of European trade. The U.K. pound reached up above the $1.31 handle after traders cited a Dow Jones report that suggested that EU and U.K. divorce terms could be resolved by October 15th.

FTSE

---

DAX

---

CAC

---

IBEX 35

---

Basic Resources and Technology stocks led the charge higher in Europe, the latter sector taking its cue from a rebound on Wall Street.

In Paris, shares of Franco-Dutch airline Air France-KLM jumped over 5 percent amid hopes of a deal with labor unions. The company reportedly offered French pilots and staff a pay hike in a bid to end a standoff that has prompted damaging strikes and triggered the departure of the firm's chief executive earlier this year.

Looking at other individual stocks, German fintech company Wirecard rose 9.6 percent on Tuesday. It came after the firm forecast core profits to grow sixfold by the middle of the next decade, on the back of a global boom in e-commerce and digital payments.

Meanwhile, Britain's Sage tumbled towards the bottom of the index on Tuesday, down nearly 1.5 percent after Barclays slashed its stock recommendation to "underweight" from "equal weight."

Global growth

On Tuesday, the yield on the U.S. Treasury yield reached 3.252 percent, its highest since May 2011, while the U.S. 30-year yield hit a four-year high at 3.439 percent.

Th at initially had an effect on US equity markets when they opened for trade but stocks cut losses on Tuesday as U.S. interest rates retreated from the multi-year highs seen earlier in the session.

The S&P 500 traded slightly higher, led by gains in consumer discretionary and utilities. The Nasdaq Composite advanced 0.4 percent as Facebook and Amazon both traded higher. The Dow Jones Industrial Average gained losses to sit about 8 points lower after initially falling more than 150 points.

Meanwhile, the International Monetary Fund cut its global economic growth outlook for this year and the next, citing trade uncertainties including the new NAFTA agreement, Brexit and the battle of tariffs between the U.S. and China.

In geopolitical news, U.S. Secretary of State Mike Pompeo has calle d on Saudi Arabia to thoroughly investigate the disappearance of journalist Jamal Khashoggi â" a critic of the Saudi regime â" after visiting the Saudi consulate in Istanbul. Pompeo's intervention comes after Turkish President Recep Tayyip Erdogan said Riyadh ought to prove that Khashoggi had in fact left the building at all. President Donald Trump has also said he is "concerned" about the situation.

Back in Europe, traders are closely monitoring the political situation in Italy, where tensions are growing between Rome and Brussels over the new coalition government's first budget and deficit targets.

Italy's populists are targeting a deficit of 2.4 percent of gross domestic product (GDP) next year, and say they will commit to a drop to 2.1 percent in 2020 and 1.8 percent in 2021. European Affairs Minister Paolo Savona on Mon day sought to assuage worries of a standoff between Italy and the EU, saying he was confident the government would reach an agreement with the European Commission.